REG mod 35k Flashcards
What percent of the American Opportunity Credit is refundable?
40% of the credit is refundable
Under what circumstances may a person give another person a yacht and no gain is recognized?
When the people are married.
What is the difference between gift tax and estate tax?
Gift tax is imposed when the person transferring assets is alive. The estate tax is imposed when the person transferring the assets is deceased.
What makes the earned income credit unique compared to most tax credits?
It is refundable.
What is the difference between a refundable and non-refundable credit?
A non-refundable credit can only reduce the tax liability to zero. A refundable credit can reduce the tax liability below zero; this results in a refund.
What is the floor used in calculating the medical / dental expense deduction?
10% of Adjusted Gross Income – medical expenses greater than this amount are deductible
What items may be deductible from gross income, in order to calculate the taxable estate amount?
Funeral expenses Administrative expenses Debts of Decedent Medical expenses Casualty losses Marital deduction Charitable deductions
The kiddie tax rules apply to what type of income?
Unearned income. A portion of a child’s unearned income may be taxed at the parents’ tax rate.
May a taxpayer, who is a dependent of another, deduct student loan interest paid?
No
What is the treatment of net capital losses on form 1040?
Net capital losses are an above the line deduction to arrive at AGI. The capital loss is limited to $3,000. Excess losses are carried forward indefinitely.
Business income derived from multiple states is calculated using the same uniform formula for each state. True / False
False. This income is apportioned by various formulas, but UDITPA recommends using three equally weighted factors, Sales, Payroll and Property.
Describe what happens to contributions in excess of the limitations.
Contributions in excess of limitation can be carried forward for five years.
When may an unlimited amount of gifts be given without triggering the gift tax?
When the gifts are to pay the costs for education or medical expenses for another person. These payments must be made directly to the provider. Also, an unlimited amount of gifts may be given to a spouse.
What is an exclusion?
Exclusions are types of income that are not included in gross income per the Internal Revenue Code.
What is the maximum percent of social security income that may be included in gross income?
85%. Note: The percentage of social security income that is included in gross income is based on income. Low-income tax payers may exclude all social security income and high income taxpayers may include up to 85% in their gross income.
